Canada is ramping up its regulatory oversight of cryptocurrency firms, highlighted by the recent mass cancellation of registrations for 23 money services businesses (MSBs), most of which are connected to crypto operations. This aggressive move builds on last year’s hefty fines against platforms like Cryptomus and KuCoin, signaling Ottawa’s intent to tighten controls amid concerns over money laundering and illicit financial flows through virtual currencies.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced the revocation of 23 MSB licenses on March 16, continuing a trend so far this year where 50 MSBs lost their registrations, 47 tied to cryptocurrencies. Finance Minister François-Philippe Champagne underscored the government’s determination to pursue enforcement actions with increased transparency and vigilance, particularly targeting cryptocurrency money services and crypto ATM operators, which regulators view as potential vehicles for fraud and laundering.
Though traditional financial systems such as wire transfers have historically been the focus of money laundering scrutiny, the government is increasingly attentive to the crypto sector’s vulnerabilities. The Financial Action Task Force estimates that 2 to 5% of global GDP is laundered through conventional finance, whereas blockchain analytics firm Chainalysis attributes less than 1% of crypto activity globally to illicit sources – a figure providing some context amid this heightened scrutiny of cryptocurrency.
Late last year, FINTRAC imposed a record $126 million penalty on cryptoplatform Cryptomus for failing to report suspicious transactions over a thousand times in July 2024 and not implementing adequate compliance policies. KuCoin, one of the largest crypto exchanges globally, was fined $14 million for allegedly operating without proper registration and neglecting mandatory disclosures for large transactions.
Canada’s more aggressive stance arrives as governments worldwide grapple with regulating digital assets to prevent financial crime without stifling innovation. The latest enforcement surge indicates Ottawa’s willingness to wield significant penalties and regulatory actions to enforce compliance, making it clear that crypto businesses must adapt swiftly or risk losing their licenses.